Welcome to today’s Energy Security and Net Zero Committee session on workforce planning, which will allow us to explore key themes so far under the inquiry from the point of view of employers, entrepreneurs and trade unions directly involved in the clean energy mission and the decarbonisation of buildings. We have our first panel in front of us. Will you introduce yourselves briefly before we start with some questions?

I am Jodie Coe. I am the director of people and change at Northern Powergrid.

I am Sue Ferns. I am the senior deputy general secretary at Prospect trade union.

Thank you both very much indeed. I will start with the questioning. How much of an impact would you expect a national workforce strategy to have? How quickly would you expect to see it make a practical difference for employers and workers?

I am happy to go first on that one. From a network company’s point of view, anything that helps to enable the development of skills across the UK is super helpful. I think the key for us unlocking that investability in the long term, which gives our company certainty to enable us to deliver. That deliverability piece is really important. I see it very much as the industry’s job to deliver, but of course some Government policy, our own skills and things like that would be great enablers to that.

I think the national workforce strategy is really important. It is good to see that DESNZ and the Office for Clean Energy Jobs have committed to a workforce strategy. It is really important because the scale of demand for skills is such that it cannot just be met by companies or the market alone. Obviously, companies have an important role to play in this, but we will need a lot more skilled people in the clean energy sector than we have at the moment, so we need a strategy on how to achieve that. As Jodie said, I do not think it is a piece on its own; it has to go along with the industrial strategy, creating the certainty for investors not only in infrastructure, but in the skills that they will need to deliver that new infrastructure.

Sue Ferns, you mentioned the Office for Clean Energy Jobs. What would success look like for that?

In terms of a workforce strategy?

Yes.

They have committed to publishing one. The first thing is that we need to see that strategy. The strategy should deal with the sprint that is required to achieve clean power by 2030, but it should also set out a plan for the longer term. A strategy is really important and it should not stop us delivering what we can in the short term. What would success look like? We would like to see, as we said in our evidence, the Office for Clean Energy Jobs develop from a unit within DESNZ to a centre of excellence on workforce strategy and skills, where it also, perhaps a little bit into the future, becomes a centre of expertise in enabling a just transition to happen as well. By 2030, we would want to see a workforce strategy, which has national dimensions but very clear evidence of it delivering in regions and localities and delivering good clean jobs. From our point of view, it would be a good idea for the Office for Clean Energy Jobs to select at least a couple of localities that are key in terms of the clusters here. For example, if you think about the north-east coast where there is offshore wind and potential for CCUS and hydrogen, there is real potential there, focusing in that way, to get on to deliver some of those jobs. I think that will be a very tangible and real indicator of success, which will also give broader confidence.

Locating the Office for Clean Energy Jobs, or parts of it, in areas where the need is greatest, using the clusters as a base—is that your recommendation?

Yes. I think we need an overarching national strategy, but in delivery, using the clusters as a base is a very pragmatic way forward.

I agree with Sue; it would be good to get a hold of that strategy as soon as possible. We have a huge transition and a huge amount of investment to get through to enable clean power. From an industry perspective, getting a hold of that is really helpful, because it will guide the investment we make in the skills and resources needed—and also for the supply chain to help to deliver that. I also agree on the need for a long-term approach. The development of skills takes decades, not years. On average, to get a skilled worker in the distribution network takes about three to five years. That does not include the time taken to attract, appoint and get them into those jobs. Anything in workforce strategy must take account of a 10-year-plus approach, rather than just some short-term measures.

That is interesting, so you are looking at 10 years. Are there immediate wins that you would like to see as well?

Yes, definitely. Some of the specific stuff we would call for is around the flexibility in the growth and skills levy. We were really pleased to see the recent reform on reducing to a minimum nine months, which is very helpful. But a lot of what we see in the workplace coming into our organisation—the new talent pool—is in the reskilling and career-moving space. Much shorter modular accredited training would be much more helpful in that space. That lends itself to the skills passports sort of idea, which we are very open to, because that would enable the transition to be much, much smoother—particularly around flexibility in the growth and skills levy, as an example.

Sue Ferns, in your experience, how effective has the delivery of skills been when managed at local government level?

The local government level is really important for trust in local authorities as long-term, stable partners in their communities. The issue has been the resources available to them to deliver the skills at the scale needed. I think the potential is there, but they have been quite constrained in what they have been able to do. I also think it depends on what skills you are talking about. If you are talking about skills for retrofit, for example—which are very much locally focused—then clearly local government has a role to play. Some of the skills we are talking about in this space are not going to be delivered by local authorities; they are national specialist skills, so they need to work in a way that is complementary to each other.

Jodie Coe, I think you were starting to answer the question I had in mind about a more flexible training system, where a good degree of it is tailored to local needs. Is that what you had in mind with what you were saying just now?

Yes. Building on Sue’s point around local skills delivery, already in industry we are working in partnership with local education providers to help to complement our own training. We are strong advocates for employer-led training, because we can make it specific to the needs of the network companies. In terms of that flexibility, what we are calling for is to be allowed to draw down those levy funds to help us to support smaller, modular-led type training opportunities for folks who want to reskill internally or come into the industry from the outside.

There is some suggestion that the kind of approach you are advocating for could lead to an unnecessary additional complexity in hiring workers. What do you say to that?

I would disagree, actually. I think it makes it much simpler, because if you come with, say, a skills passport that has a list of transferable skills, the flexible approach to the apprenticeship levy and the use of the growth and skills levy allows us to fill those gaps much more quickly and specifically. That enables people to get in, start working and become more productive much sooner in that process.

Thank you very much. I will move on to Anneliese Midgley.

I can only speak on behalf of network companies, and we do not use a lot of imported labour. We are very much about growing our own, given the fact that these are quite secure, highly skilled jobs that are needed for the long term. We find it much more beneficial to grow our own, so we tend to focus much more locally. Given that a lot of our employees are also customers of ours, that is a key part of us being an anchor organisation. The jobs that we refer to our highly skilled and therefore well paid already. From our perspective, we probably do not have a lot to add on immigration and the importing of labour.

I think some of that takes place in the sector. We see it in some of our membership areas, where that labour is imported at lower wages, which obviates the need for companies to raise their pay levels. We see some of that, but I think it is a very short-term approach. That is not to say that there is not a short-term role for recruiting some labour from overseas, because clearly there are pressure points, but that could lead us into a downward spiral. However, as Jodie has already said, upskilling our own workforce will take time. One of the things that we need to ensure is that people who are thinking of entering the clean energy labour force have certainty that they will have good jobs. That, in turn, depends a bit on certainty over the direction and longevity of Government policy. Lots of people want to work in this area because of an environmental commitment, but they also want good jobs—to some extent, it is a bit like turning around an oil tanker. There is some short-term need but we have to be careful about the downside, and we have evidence of the downside.

In some areas of the supply chain, we have evidence of skilled workers being imported from eastern Europe who have been employed at rates significantly below those used by the prime developer, and that has caused difficulties in the workforce and with the delivery of that labour.

In this sector, a lot of employers have good apprenticeship and graduate programmes. My view on flexibility probably differs slightly from Jodie’s: I think we need to have more routes in for people, so that we have an expanded and more inclusive workforce. There is an issue here with the intersection of qualifications and competence, and how you certify that competence. I would certainly like to see other routes in. Some big employers are doing it, such as EDF Energy at Hinkley Point C, where they have vocational routes for people without those academic qualifications to demonstrate their competence, which then allows them to progress on to apprenticeships. I would like to see flexibility in that way: not a lowering of standards but different routes to allow a wider group of people to progress into these roles.

I will repeat what I said—from a network company perspective and from my organisation’s perspective, we have sponsorship licences, but we use them in very limited circumstances for niche skills that we need now while we develop them in the long term. It is not something that we use as a key talent strategy in our organisation.

We would strongly support the use of conditionality. There are levers that are readily available to Government, for example through contracts for difference and the direct investment we will get through the National Wealth Fund, Great British Energy and so on. You have to do that to get a system-wide approach. While some employers will be doing good things themselves, we need a system-wide approach. We see a loss of skilled staff from employers that are good at training and developing to those that have not trained and developed, but pay a slightly higher wage. That is not a solution. We need a broader solution to that and we would very much support conditionality. We would also say that Government might need to look at regulation and regulatory incentives and at whether the remit of Ofgem, which I know is under review, is right for the times that we are now in. Whether it does enough to incentivise workforce investment is a question to be addressed.

Sue Ferns, I will come back to what you said about bringing new entrants into the workforce, which is very encouraging. I have heard from some in the industry that they are very keen on attracting young people who have been out of education, training and employment. The example of Hinkley Point C is very encouraging. Can you recommend a broader policy lever to increase the number of people potentially available to come into the workforce?

You can use conditionality in award of Government contracts as a policy lever, but I think you will also find local authority leaders who are very keen to engage in this. I have talked to the leader in west Cumbria, who knows exactly how many NEETs there are in that area and is very keen to work with employers and Government to get those people routes into employment. It is for Government to set the tone through policy and be very clear about that, set some conditionality and then provide support for that to happen.

Does the DWP have a significant role here?

Yes, the DWP must have a role for sure.

Without going into a whole other inquiry into work and pensions, what needs to change? What are the simplest changes that the DWP can make to enable the attraction of workers into the industry?

That is not my area of expertise either, but I have read the recent consultation document about pathways into work and, without having much expertise in this area, I think there is something about not penalising those who are out of work for taking on and trying out work opportunities. As I understand it, at the moment, it is quite difficult because you would lose income if it does not work out for you. There needs to be a more nuanced approach to that. But, as I say, that is not my area of expertise.

Jodie Coe, is there anything you want to add on that topic?

In our specific experience, particularly when we recruit into entry-level roles, of those who may have been out of work for some time, the key enabler to make them successful is work readiness. On Sue’s point, perhaps there is some policy or regulatory change that allows them to make that transition and not lose out on any of the benefits system they have while they get settled into the world of work. I definitely think that would be quite helpful. We see that in our entry-level jobs at the moment. From an industry perspective, work readiness as a concept would be really helpful.

Can I add briefly that trade union representatives have a role to play here? Union learning representatives have done a great job in supporting people, acclimatising them to the workforce, mentoring them and guiding them. Policy? Yes. Regulation? Yes. But you have that on-the-ground support as well. This is a highly unionised sector, full of people who care about their industries and communities, so we should not forget the role of unions in this regard.

You have neatly moved to the questions that Torcuil Crichton is probably about to ask.

Sue, you have anticipated my question about what role trade unions could play in pathways into work. Earlier on, you mentioned that it was also a question of resource. I presume that that is resource in the FE sector—that is, in the college sector?

Clearly, the FE sector is under-resourced in this regard. There are two things that I would highlight. First, they need certainty to invest in new programmes. It has got to be a minimum of five years for them to invest and set up new programmes for people in this sector. The other thing is that, for the trainers and assessors needed in order to certify competence, there is a huge gap in pay between what they earn on the tools and what they can earn in the FE sector. I know that some companies are topping that up to ensure that there are enough assessors, but something has to be done about that gap, because it is unsustainable. You will not get enough workplace assessors if they can go and earn double, or a lot more, on the tools.

I would add that Energy & Utility Skills is quoting for the energy sector to stand still. We need to replace about 150,000 members of the workforce over the next two to three years—that is not without the net zero transition—and that is due to retirements. We see a great opportunity, even internally in industry, to get those people to be trainers—a philanthropic give-back scenario. But you are right that we absolutely have to make it attractive, because they are earning overtime, although added to things that come with working on a 24/7 operation such as a network. How do we enable a transition that allows them to stay in work longer and do the mentoring and training role? Again, there is a question around the growth and skills levy, and using that to train the trainers—giving them the competence to do it, and keeping them whole from a financial perspective while they do that role. I agree that it is a known current barrier that we have, which we are trying to address.

Encouragingly, I saw that approach at Harland and Wolff in Belfast just the other week, with welders teaching apprentices full time. That is their job, basically. I have also seen it at Arnish. Hinkley Point is always cited as the example of how to do it, but we have heard evidence from other people that there is no clear pathway for people to retrain, or to upskill for jobs, for clean energy in 2030 or beyond—for example, decarbonising homes beyond that date. Jodie, what has to happen between industry and education to get a clear pathway for that?

In relation to reskilling, industry needs to be clearer about what skills and competencies we are talking about, and what accreditation or credit people can get from skills acquired elsewhere, and making that more readily available. We have some great individual examples in our organisation—for example, a retired fireman, aged 55, then came and did an apprenticeship to be an overhead linesman. It turns out that firemen are very good at climbing poles. But he had to go through a two-year apprenticeship scheme to do that. If the accreditation standards allowed it, he would have been able to get credit from elsewhere for the experience that he had brought. However, that is not systemic—it is just one example—so how do we work with the education sector to make those opportunities readily available, and work with the apprenticeship standards or the skills standards to enable it to happen more quickly? I think that to make that happen, industry needs to work better with education, and the DFE needs to work better with industry.

I am going to ask a couple of questions about how we cover the costs of providing skills and training. Jodie, we have heard that public investment could crowd in private investment in skills and training. Can we expect larger employers to cover the costs of training through entire career paths, from apprentices to the regular upskilling and reskilling of older workers, as you progress towards clean energy? If not, where should the public investment be directed?

It is a great question. As I said in my first response, industry absolutely has a huge responsibility to deliver whatever the regulator sets out, and what the customer asks for. I think the heavier weight is on industry to do that. Changing policy around the investability into the network to enable net zero unlocks the ability for industry to go and deliver those skills. Then we are held to account on that in the regulatory price control deal that we have. That said, public spending has a role to play, particularly in the education space, so that people come to us with a level of work readiness and then we develop the specific competence needed to deliver the role that they come here to do. The key to that is making policy, from an Ofgem perspective, unlock investment, which gives certainty over the long term. That enables us to do it, because skills development is a long-term game.

Jodie, you said earlier that filling workforce gaps would take years. Sue, would you expect those gaps to be resolved quickly if there was more public funding available to address skills training in low-carbon sectors, or are other barriers more of an issue?

Some of the skills gaps could be, particularly for workers who are transitioning from other roles into these sectors. Evidence shows that there is a common thread of skills between jobs in the clean energy sector and more broadly in these kinds of roles. Where there is a small gap between what is required and what exists now, public investment could help it along. In terms of longer-term needs, I think Jodie is right. Employers need to do more. They have not had perhaps as much certainty as they have needed. To the Government’s credit, we now have clean power by 2030 and net zero by 2050. We would like to see the industrial strategy, the NESO strategy and the spatial energy plan. Those will provide even more certainty. A key role for Government and for the public purse is in developing the skills at an early stage, because a lot of them take a while to develop—two or three years. At that stage, it is not necessarily clear where those people are going to be employed. We know there will be a skills demand, and I think that that is the role for the public purse. Employers could do more, and hopefully will do more, as the policy certainty becomes clearer, but if they do not, Government should use their levers around conditionality and requirements to ensure that employers invest as required.

There is a good start with the skills passport and the regional skills pilots in this regard, and hopefully those will develop into mechanisms that will make this successful. Some of the push-back you will get, particularly from workers in oil and gas, is that, although the skills passport is fine, it does not have a job at the end of it, and these are very highly-paid jobs. The issue is about providing good jobs. That does not necessarily mean that you provide pay at an equivalent level, but a good job is a well-paid job. It is also a job where you have opportunities to progress, develop, have a career path and so on. That is what the clean energy sector has to provide. We have talked a lot about a just transition. We have not seen so much of it happen as yet, and we need it to happen. The Office for Clean Energy Jobs could help with that. Another key thing is advance planning. What we see in oil and gas, as we have seen in parts of the steel sector, is that the crisis happens and then we think about the transition. That is the wrong way round to do it. We know what the direction of Government travel is. We therefore have a fair idea about what skills are going to be required and what jobs might emerge. I think there is a responsibility on Government, employers, unions and education providers to work with young people in advance to develop those skills to ensure that the transition into clean energy can happen. We cannot necessarily do it from a point of crisis; it has to be advance planning. The green jobs taskforce and the green jobs delivery group, done under the previous Government, had some useful ideas in that regard about stakeholders all working together in advance, doing that planning and doing it in the communities that are most in need of those good jobs.

It is not a just transition if you are asking people to take a dramatic fall in their living standards. That is not a just transition. For some people with skills and expertise that are in demand internationally, they will choose to take their labour outside of the UK. I would say this, wouldn’t I? A key way in which you ensure you have good jobs and are raising standards—not just pay, but things like health and safety—is by having union voice and worker voice. I am not saying that that would necessarily happen on day one, but it is another way in which you will raise standards in the clean energy industries. I think it is an important part of any Government policy on conditionality. Anneliese, I do not think it is an answer for oil and gas workers who are facing job loss right now. I am not sure that there is a just transition for them right at the moment. It depends on their circumstances, but as I say, this needs a planned approach and it needs pressure from all sides. It needs Government policy, but it also needs work within companies and organisations to give workers that voice, to ensure that standards can be raised organically within those organisations.

The only thing I would add is on my point about the number that Energy & Utility Skills is quoting to enable net zero—we are looking at 600,000 to 800,000 new jobs. We cannot keep doing what we are doing today, because we will not have the skills to fill those jobs. I agree with Sue that it is about being long term in the view and clear on the investment strategy, so that then unlocks the certainty for organisations to say, “I can invest in this in the long term. I can open up skills passports. I can work in the long term with FE and Government to see, ‘How do we do this?’” By default, that will create those high-value jobs and that positive workforce environment that we all absolutely yearn for.

More positively, if you look at it from an oil and gas point of view, it is really very challenging, but I think we all know that there are lots of jobs in this economy that are not good jobs—poor-quality, low-paid jobs. For those groups of workers, there is absolutely a good transition to be made into parts of the clean energy sector, so I do not think we should forget that either.

Do you think the Government should extend activities in the North sea?

We do not have members in the North sea, so we have not got a policy position on that.

That answer is almost good enough to be a politician’s.

On clean energy jobs, there seems to be a disparity between predicted job numbers and created job numbers. We can talk about a just transition, but if the jobs are not there, there is nothing for anybody to transition into. Do you think there is an issue about the reality of vacancies? You have also talked about the delays and the time it takes to do the training, but when do we think the jobs will actually be available to people? There is risk involved in training when the jobs are not there.

It is a great question. I will point to a recent National Infrastructure Commission report, which talks about the need to develop skills for the long term. We already know that we do not have the workforce today to deliver net zero by 2030. I keep going back to the investability framework, but if we get the regulator to set the right framework, with the right regulation and the right measurement to hold network companies to account, we will have to deliver it; otherwise, we will fail regulatory commitments and not deliver for our customers. Those jobs will exist because they have to—because of the size of the transition and the amount of work that has to be done to achieve the 2030 target and beyond.

One thing we have not mentioned so far is supply chains, which are an important part of the clean energy picture. There is also a need for some policy certainty to ensure that we are investing in the skills and products that will be required as part of the supply chain. Of course, you are absolutely right. There is a huge gap between job predictions and jobs actually realised. Part of that is because quite a lot of those jobs have been offshored and are being done in countries with poorer labour standards but much lower costs. This is a key issue for energy security, apart from anything else. If you are not able to manufacture the components and supply chains in the UK, you lack not only good jobs but energy security. That is an important part of the policy dimension.

A quick point that we might not have teased out in other evidence is that the skills gap goes deeper than FE colleges and industry—it goes back to the education curriculum. Any thoughts on that?

I absolutely agree with that. I am not a teacher. Teachers will have views about how crowded the curriculum is already, but there is probably insufficient emphasis on vocational learning now, compared with previously. I also think there is a huge issue about social inclusion. A lot of companies make very good efforts with outreach into schools and colleges, but I know for sure that a lot of that outreach is done into schools and colleges where the students already have good social capital and good connections. I worry about the schools and colleges where the students and their parents do not have that. That is a real missing part of the equation, too. Probably the only way you address it is by ensuring that it gets on to the curriculum for everybody.

I think there is a big gap in the work experience domain. I have a 16-year-old daughter about to start her GCSEs, so this is very close to my heart personally. What schools provide in terms of work experience from year 9 through to year 13 is very much dependent on the pupils themselves, and, to your point, Sue, how privileged they are and what work experience their parents can get access to. It is a huge gap. Perhaps there is some work to be done in collaboration with DFE and with industry to enable good, high-quality work experience that raises ambition and aspiration for all, and opens up the whole new energy space. Bluntly, that demographic want to work in clean energy; they see it as very important, so I think there is a gap in the work experience space as well.

It is interesting what you were saying about social capital; you both confirmed it. I was a member of the Education Committee 12, 13, 14 years ago, and we heard exactly the same points. It is about time we made some changes. I will move over to Luke Murphy.

It is good to see you both. One of the big calls in the written evidence that we have received is for greater collaboration between Government and those involved in workforce planning—trade unions, businesses and educational institutions. Could you say a little bit about how you think that collaboration is working? Do the Government need to do more engagement with trade unions and businesses in the sector, or do you think that the engagement going on is sufficient?

Speaking from our experience in Prospect, we do not see it in practical terms except in very small patches. I do not think it is the norm or the expectation that you will consult with your trade unions on workforce planning.

It is difficult to navigate the landscape with Government. We are not in the public sector, for example, so it can be quite difficult to navigate. There are some pockets of really good work, particularly locally, but it is about identifying the areas that are going to have the biggest impact, and then going at them—not boiling the ocean—and working closely with the trade bodies is a good route to doing that. I have mentioned Energy & Utility Skills; they have done a hell of a lot of workforce planning already in the energy utility sector. They have lots of good data that we use, and it is the same with the Energy Networks Association—they are growing that capability. If there is anywhere where I suggest the Government collaborate more, it is through those trade bodies, because you then get the voice of the entire industry, not individual companies. To Sue’s point around the trade unions, we are heavily unionised. Prospect represents a big proportion of our professional technical workforce, and we work very closely on a local level around these sorts of issues. But one company alone will not solve it, so it definitely needs to be a national approach.

I will also add that there is not a regulatory requirement on this either. As energy unions, year after year we push Ofgem quite hard on workforce planning and resilience. The response that we always get is that it is up to the companies.

What kind of engagement have you had with the Office for Clean Energy Jobs?

We have had good engagement with the Office for Clean Energy Jobs. We have a regular consultation with them, and we hope that that will continue. Obviously, they are at the stage of developing proposals at the moment, so our hope is that in the next couple of months, as we see the industrial strategy and the spending review, those engagements will continue and evolve from consultation about what might happen to how we work together to deliver.

Do you think there is enough working across Government? Do you think the Department for Education and Skills England are involved in the way they should be, in terms of workforce planning? Is there enough join-up between Government Departments?

From our point of view, Skills England seems to be lagging behind what DESNZ are doing through the Office for Clean Energy Jobs. It may be that they are doing it, but we do not have visibility of that. They potentially have an important role to play, but we might have a concern about whether that role is going to be sufficiently based on industrial experience, as opposed to qualifications. Qualifications are obviously really important, but I do not think you should be thinking about qualifications in a context where you are not being informed by industrial experience.

I agree. I am not aware of any close collaboration between Skills England and DESNZ, and things like that, so I will not be able to comment. But it absolutely goes back to the point about how we have to engage with industry. We will be able to quickly get to the key competencies and skills that are needed, both in the short term and how you develop them in the long term. I would definitely encourage that more.

Finally, we obviously do not want to wait until 2030 to see whether the Government’s workforce planning has succeeded. What are the things that you are going to be looking out for, and how should we be measuring and monitoring whether the workforce planning that the Government are undertaking is succeeding? What are the markers of success?

We are looking for impact on jobs and communities in the run-up to 2030, what the longer-term plan is in terms of engagement, and how that plan is going to be delivered. I do not think anybody expects that the Office for Clean Energy Jobs will have the answer about exactly what the combination of technologies is by 2050. It needs to be a dynamic plan, on which the Office for Clean Energy Jobs are consistently working with key stakeholders. It is about what can be delivered in the short term, what the plan is for the longer term, and what engagement around that longer term plan looks like. But, as I said, a good outcome from that plan would be to be able to demonstrate, maybe in a couple of industrial clusters, what has actually been delivered by 2030, and what difference that has made to jobs and communities—GVA, if you like—in those areas.

Being a network company, we are heavily regulated by Ofgem. We are measured quite significantly because we are regulated on the outputs to which we commit in our price control plan, so there is a source of data there already that tells you how much our organisation is investing in skills, how many jobs are created, and how many reskillers we have. A wealth of data is probably already available; just drawing that out could show the impact, for sure.

Do you think that workforce planning is done well by any country or Government, around the world?

I can point to a report done back in 2020 by the High Value Manufacturing Catapult and the Gatsby Foundation, and was funded by Innovate UK. That talked a lot about Singapore as a model. Singapore has what I will call proper technical colleges for specific roles. If you imagine it in the UK, you could see a distribution network technical college developing the cable jointers and the techniques that we need for overhead lines, and developing the data analysts that we need for the energy system. Singaporeans do that when they leave school, they complete that and go out to the workforce already trained and skilled. The distribution companies then fight the war for talent between themselves. That is how Singapore does it, and it seems to work very well, so look at Singapore.

I will just add to that and say that data, and having verifiable data, is really important, but I think that you also need to be able to tell people a story. People like you and us will look at the data, and it is important that we interrogate that data, but beyond this room people do not talk about clean energy or green energy; they just talk about the jobs that they might get. For me, a measure of success is that I can tell the story of the difference this has made to those communities. We need to be able to do that by 2030.

I agree, and you should probably do it in the next 18 months to two years—way before 2030. We in the network companies certainly have loads of stories. I talked about the fireman. We have a maths teacher who transitioned to be a power systems engineer because he is, funnily enough, very good at maths and there is a lot of maths and physics in that role. Finding those stories, to promote this as an attractive sector, will be key. I agree totally with what Sue says.

Thank you very much. That concludes our questions for the first panel. Thank you for your evidence. Witnesses: Leah Robson and Tom Jarman.

Welcome to the second panel in our session on workforce planning. I will ask our panellists to kindly introduce themselves, starting with Leah.

Hi. I run a company called Your Energy Your Way. We install solar panels and heat pumps. We are a very small company and we employ 13 people. We have been going for about seven years, and we have a particular focus on getting more women into the sector. We are set up as a social enterprise. We are still a limited, for-profit company, but we are a social enterprise that is trying to get more women into the sector.

Good afternoon. I am a self-employed consultant. I do client advisory services in the fields of housing, construction, decarbonisation and energy planning.

Thank you both for being here. My questions are similar to those I asked the first panel at the start. How much of an impact would you expect a national workforce strategy to have, and how quickly would you expect to see it make a practical difference for employers and for workers?

I have been thinking about this quite a lot. I think we are used to workforce planning where there are familiar situations, such as a large single employer failing or where we need particular skills such as a shortage of lorry drivers and we need to resolve that. With the net zero transition, we are trying to do something very deep and significant—probably one of the most significant things in all our living memories: to strip carbon out of our society within about 25 years. There are multiple challenges aligned with that in terms of the numbers of people, in terms of the range of trades and professions, in terms of the depth of those skills and in terms of how those skills need to collaborate and integrate, as well as practical challenges such as how you spend £600 million well and how you move from a system of quite fragmented, small pots of funding that sometimes pull against each other into something more coherent and aligned. There are also quite significant strategic outcome risks. If we do decarbonisation badly, we will, for example, create unhealthy homes, because we will not have got the ventilation right because we will not have had the skills to do it properly. Also, lots of societal outcomes are deeply embedded in decarbonisation in terms of the quality of our housing, mitigating fuel poverty, economic resilience for SMEs, employability and skills and training over the very long term, because we are talking about a very hands-on set of skills. We need some sort of strategy to bring all of that together into one place. There are some caveats that I will leave to one side until you wish to explore them, but, in principle, yes, for those reasons I have given.

From my perspective in our sector, if it can do something to get right down to the granular level of detail of who we are going to train to fit heat pumps and solar panels, that would be very useful, because at the moment some people seem to be saying, “Well, all you need to do is retrain all the gas engineers”, and another group of people are saying, “Well actually, that is an ageing workforce, many of whom will not be employed by 2050 even if they may still be employed by 2030. We should not be looking at that skill set; we should be looking at new apprentices coming in.” You also have the issue of reskilling workers. It is not at all clear how you do that in our sector, so if it actually could get into the granular level of detail about those kind of questions, that would be very useful.

Thank you.

Can I just pick up on the point you raised about when it might take effect? One comment I was going to make, which I am happy to explore with the panel if it is helpful, is that we tend to view the clean energy transition as adjacent to construction, when actually—my specialism is construction—a lot of these skills and this investment flows through the construction sector. In your 26 March session, I think it might have been you who referenced “Modernise or Die: The Farmer Review”, which articulated construction as quite a dysfunctional sector. One of the constraints on an effective national workforce strategy is how it acknowledges that dysfunction and responds to that dysfunction. I think that if it can act as a framework that pulls the levers that counteract dysfunction, it can have an effect within five years. Without acknowledging that dysfunctional risk, it might just add noise rather than signal.

Thank you. We have had a number of pieces of evidence saying that focusing on green jobs misses the point that these skills are required in the economy whether they are to do with the clean energy transition or not. Should the remit of the Office for Clean Energy Jobs explicitly cover retrofit and other roles outside the Clean Energy 2030 and transition workforces?

If they can perform a role that straddles several Government Departments. One of the key challenges, I think, is that there is a pressure to deliver heat pumps and solar cheaply, because somebody has to pay for it and that has to be Government or homeowners. Where does that money come from? There is the pressure to do this cheaply versus the pressure to do it well. There is inevitably the pressure, within Government, of cost versus delivering quality jobs and delivering training as it is done, so if the Office for Clean Energy Jobs can have a role in navigating that challenge, that would be incredibly useful. There is a lot of pressure on me as an installer to install as cheaply as possible, but also to install as well as possible and to train the next cohort of workers, so how do you square that?

It is a good question about the remit of the Office for Clean Energy Jobs, in the sense that you have a lot of upward pressure on the numbers needed, and that comes from the need to build 1.5 million homes and the need for retrofit. Even finger-in-the-air statistics suggest that when we have a national programme of retrofit running with some sort of stability and equilibrium, people are going to be transforming about 20,000 homes a week. There are those pressures and then there is the clean energy infrastructure, the civil engineering and so on. That boundary puts a wide boundary around clean energy jobs, but I think it makes sense to include retrofit, because we are not going to have clean energy or net zero without domestic retrofit and without it running at scale reasonably soon. If you look at the carbon budget we have, even a gentle projection of housing retrofit burns up all the carbon budget. Also, a lot of sectors have decarbonised quite effectively—power generation and industry in particular—so we are starting to enter the diminishing returns and are going to have to tackle tricky stuff like housing. That is partly why it should be in the remit. The other thing that, as you have suggested, is worth considering is that those jobs bounce between, the SME supply chain bounces between, civil engineering, domestic work, retrofit, new build and other bits of work, so you need a remit that is going to encompass how the sector works in reality across that spectrum.

Thanks very much. The Minister is now responding to the debate, which means we are going to be voting at some point in the next few minutes. When the bell goes, I will suspend the session, but we will keep going until that point.

Welcome, both. Tom, in your experience, how effective has the delivery of skills been when managed at local government level?

There is a lot of passion in local government for skills because they understand that skills are the route to better employment, to some sort of job security and to a way to progress in life. They are quite heavily strained by the capacity they have; we are all aware of the funding constraints they are up against, but I think where they can be effective, they are. In preparing for this session, I spoke to a few people I know in the sector, and the frustration seems to be not about the amount of money going into skills but more about the way it tends to be split into different pots, trying to do slightly different things. It is quite fragmented. One person I spoke to said, “Time is my most precious commodity, and I spend a lot of it just applying for small pots, to put small pots with small pots.” I think they can absolutely see the value. I am more aware of the North East Combined Authority because it is where I live. They can see the connection between the green economy, skills and employment, and economic growth. That is featured in their draft local growth plan. Where it becomes more problematic is to do with their capacity, and the way that the overall investment programme is designed.

As a supplementary, have you seen any difference where we have combined authorities as opposed to where it is been handled by individual local authorities?

One person did comment to me that having single settlements and blocks of funding that last for a longer period makes it much easier to plan. One of the problems in construction and education is they work on much longer timescales—five to 10 years, ideally. The closer you can get to a single pot where you can orientate it around outcomes, and have certainty or continuity in terms of the longer term, the easier that makes life.

Is the problem in sourcing local, skilled labour in construction simply a matter of pay, or would you say there are more complex reasons?

Pay has consistently not come up as an issue. It is probably more helpful to look at programmes that work well, such as programmes where there is a good connection with employers so that people can do site visits and employers can come in and talk to them, and help to shape programmes. Efficiency North, in my region, is very good at doing on-site construction hubs where people receive training for jobs on the site where the hub is based. The role of experience is also important in terms of weather, because construction is an all-weather job. Some of it is quite cramped and quite dirty, even if it is well paid and quite skilled, so the more exposure that trainees can have to the real world of construction, the higher retention is. Another aspect is how colleges seek to retain people in construction. The other advantage of that real-world experience is, if you think you want to be a bricklayer, you get some real-world exposure to it and you find out that you do not. The question becomes, “How can we retain you in construction, even if that is not the route you want to go down?” It is issues like that that have come up, rather than pay. The other thing to quickly mention is the cyclical nature of construction. It is very stop and start. Government programmes sometimes exacerbate that. We tend to have people who come in, get on-site experience, get trained and then, because of the cyclical nature, there is a downturn, they are let go and those skills leak out. It is very hard to then get people back in again, so there is more that can be done to make it less cyclical.

Leah, how easy is it for an individual firm like yours to pass on such costs to consumers, or will consumers simply put off retrofit? I am talking about the cost of delivering skills.

We very much target the high-quality end of the market, and in doing so, we are able to charge a premium because we have considerable costs due to the four apprentices we employ. In general, our customers are quite a specific bunch who appreciate what we are doing, but they are the fortunate few. In general, people want this done well but as cheaply as possible. Often, people do not actually like the idea of having a trainee working in their home. They want to make really certain that the trainee is being incredibly well supervised, and that they are not going to have any issues. Passing on that cost is a real challenge unless you are in a niche bit of the market that we seem to have found ourselves in.

Welcome to the witnesses. How relevant is the Government’s definition of a green or clean job to the running of your business, Leah?

It is largely irrelevant. People who work for me want well-paid jobs that they get some satisfaction out of. Sometimes that satisfaction is derived because their job is also benefiting the environment, but that is an added bonus rather than the be-all and end-all of the job. When it comes to promoting these jobs, it can have more relevance. When you are trying to tell the story to teenagers, or to anyone really, who might want to come into the sector, it helps to say that these are clean jobs. That can be part of the story, but primarily people want a job in which they are rewarded for their work and have reliable employment.

Various cohorts enter construction, and if we get a chance to talk about career pathways, then it becomes more relevant to that. If you are a graduate, the idea of working in a job that connects to sustainability, decarbonisation and organisational values is more important. It is a bit of a crude definition, but if you are coming in as a much younger entrant, it is much more about, “Can I earn enough when I start to wash my face? Is it fairly local, because I don’t have a car? Can I get my on-site portfolio completed?” An essential feature of construction is that 98% of the construction sector is SMEs. The language that most SMEs will use will not necessarily be in terms of “clean and green”. It will be in terms of a construction role, or a well-paid, skilled or respected role. The other thing is that people do not channel in construction in the way that we think they do. The roles are very interchangeable in terms of the sites and construction projects—well, they are not interchangeable, but people move about sites in different types of construction projects quite frequently, so it is very hard to put a boundary around it in terms of how we speak to potential entrants. It is sensible in terms of the Office for Clean Energy Jobs, because at that level you can bound it, but it is less helpful in terms of new entrants.

I am very familiar with the Farmer review, and I did a lot of work around that at the time. There is an issue around diversity, for example, in construction in terms of the breadth of people from different backgrounds who are attracted to the industry. Do you think there is any language or terminology that would be useful in opening up opportunities to ensure that they seem attractive to people from all backgrounds, so that the sector is able to attract a more diverse workforce, whether in a green job or anything else? What is the most effective means of attracting a broad spread of people to the industry?

It is less about language and more about the ability to pay them a decent wage. Often, if you take on a diverse workforce, you tend to take on a slightly older workforce. If you take on people at 18 or so, you are more likely to get your archetypal construction entrant, but if you are looking at people of a more diverse background, it tends to be slightly older people, so to take them on is just an awful lot more expensive. You have to be paying the national living wage, and there are all sorts of extra costs. They are very much not living on the bank of mum and dad anymore, so cost is a really big thing if you are going to get that diversity of entrant, because people are generally older.

There are two sides to this. First, a number of peer networks have been set up in construction to try to welcome people from across a much broader spectrum—the National Association of Women in Construction, for example. There are various peer networks trying, with a reasonable degree of success, to present construction as a dynamic, challenging and welcoming sector to be in. There is also the Constructing Excellence network, which has its Generation 4 Change network. That is for 18 to 30-year-old people in construction to offer mutual support. I am not sure to what extent changing the language would help. The bigger issue tends to be that construction often works on different timescales from Government programmes, and that causes a lot of misalignment. The wider ambitions that we have for the construction sector are constrained by the fact that most clients tend to base their work on cost and compliance. It tends to be fairly short term. They are quite bad at articulating pipelines. They are not very good at articulating what success looks like, how they are going to incentivise it and how they are going to reward it. There are a number of issues like that.

Sorry—when you say “they”, who are you talking about?

Clients—large and small. Infrastructure tends to be slightly better, because it is necessarily working on much longer-term timescales. Diversity is affected more by those bigger issues than necessarily by inherent hostility to it in the sector.

Do you think that anyone should really be using the terms “clean jobs” or “green jobs”, other than the Office for Clean Energy Jobs? Is it helpful for anyone else to use those terms? Should we just be talking about high-quality, skilled and well-paid jobs, as long as they are those things, and just leave that kind of language for definitional purposes?

That is where I would go personally, yes.

I think that using those terms has some merit, but it’s not the be-all and end-all. You need to have the other stuff in place first; you have to be providing good jobs. If you are also going to attract a certain cohort of people because they are interested in a green job, that is great, but it is a plus rather than a core.

Thank you both for coming in. Tom, I was fascinated to hear what you said about on-site skills hubs, and I wondered whether they are run by the industry or by colleges of further education. What kind of collaboration do you see between the two, and is it sufficient?

They are often a mixture of the two. It tends to be an example of where collaboration between the educational sector, the construction sector and clients has worked quite well. The organisation that I mentioned was Efficiency North, which has established a couple of on-site hubs on actual construction sites. The construction site has to be of a reasonable size to support one, because obviously you need to be training people who have a reasonable chance of being a part of the pipeline of employment on that site. Another example, which again is from the north-east region, is a global architectural practice called Ryder, which has established PlanBEE, with BEE standing for built environment education. That scheme is also about attracting people into professional training—building services engineering, for example, and those sorts of professions. A lot of industry—not all of industry, because, as with people, there are different companies with different motivations and what have you—is very keen to get people on board. I am quite heavily involved in the Constructing Excellence North East network, and you meet a lot of people from the supply chain there who love the construction sector and want to bring people onboard. Out of that come some quite good collaborations. One of the things that the national workforce strategy could look at addressing is shifting some of the skills funding towards a more outcome-focused approach. That is potentially a big gap. Your criteria for success become much more about how you can collaborate, what partnerships you can build, and what the skills and training outcomes that you are going to develop are and how they are going to be measured. Then you are allocating potentially more substantial pots of money over the longer term. I do not think that would increase the spending; I just think it would redirect some of the fragmentation and the messiness.

That works at scale, but, as you said, a lot of the construction industry consists of small and medium-sized enterprises. Can they be expected to take the risk of taking somebody on and training them up?

Again, a lot of SMEs are willing to do that, but far too many SMEs operate one contract away from failure, so you are asking them to do something that potentially bets the farm. If you are an SME in construction—this is a sweeping statement, but it is true enough to be a barrier—you operate in a low-margin environment on short-term contracts. You are measured by cost and compliance. There is a lot of risk dumping and, frankly, there are quite dodgy payment terms and contract terms. A lot of institutes of technology or local skills improvement plan—LSIP—partnerships ask those SMEs to participate in what they are doing, but people cannot take the risk. They cannot take time away from revenue-earning activity to spend half a day in a workshop. They cannot take on people for three years when they can only see six weeks ahead. There are more recent examples, but when Carillion failed they swept away thousands of SMEs in their wake. There was a huge amount of stress and financial loss for all the SMEs that were dependent on the payments from that supplier. They did not have the financial resilience to survive that. You are asking the same SME chain to take on quite long-term risk.

Do you have an example of good practice where SMEs are in a position where they do have those longer-term certainties?

That was going to be my question as well. Is there a way round this? Are there examples?

I do know of one boiler manufacturer, which now manufactures heat pumps, that has taken on a sizeable cohort of apprentices, but they are not employing the apprentices; they have given them free of charge to local SMEs. That is a fantastic initiative.

Name them and praise them.

Oh, name them—I am never sure if I can. It is Vaillant. They have taken on a group and are making them available to local companies.

Is that being done under a transfer of the levy?

I don’t know the exact mechanics. That was going to be another of my points. We can access levy money in order to pay the fees for our apprentices to go to college, but that is a minuscule fraction of what we have to pay to take on apprentices. It costs us around £30,000 a year to afford an apprentice if they are on the national living wage. That is not including our £20,000 insurance bill, a sizeable portion of which is made up of having four apprentices on site. These costs are vast. So much of the money goes to training colleges, and more of it needs to find its way to SMEs. [Interruption.]

Right. Thank you very much. We will suspend the sitting and come back after the votes. Sitting suspended for Divisions in the House. On resuming—

Welcome back to the second panel on the workforce planning inquiry. Tom Jarman, I think you have another example for us.

Your colleague asked for examples of SMEs in the context of apprenticeships. This is an SME that has a particular model for skills and training, rather than an apprenticeship. It is a Manchester-based SME called B4Box, and I think it is worth drawing the Committee’s attention to its model. B4Box takes on unskilled trainees and skills them up over a period of time. Those trainees are paid a full-time wage during that training period, which includes a lot of on-site experience. Its retention is very high, although it does occasionally lose trainees. I mentioned earlier that construction is quite cyclical; you will get an upturn and spike in demand, so it will have trainees who leave because they are getting paid considerably more at another company. However, that tends to be a very short-term spike, and they are then let go. Other than that, its retention is very high. The benefit for the trainees is that you are paid an employment wage for getting trained up, unlike college, where you might receive a small bursary or assistance towards travel. Earlier witnesses spoke about conditionality, or letting contracts with particular conditions attached on workforce planning, employment and skills. I always think that conditionality is a bit of a bolt-on that is trying to cope with dysfunction, rather than being a helpful thing in itself. The ultimate condition is what the client wants the contractor to do, how they are going to recognise that and reward it, and over what term they are going to form a partnership with that contract. The B4Box model works because it contracts directly to the client. In a lot of the main contractor models that are used by clients, the main contractor takes a 20% margin, and then an SME sits at the very tail end of that contract. Because there are a lot of areas of spend that you cannot do much about—health and safety, welfare, materials, contractor margin or client margin—the bit that gets squeezed is the SME margin. That is why SMEs often end up working at the tail end on the short-term contracts with a low margin. If the Committee is visiting Manchester, it is definitely worth reaching out to B4Box, because it is a really interesting model. That does not mean that the model should dominate the construction sector, because some main contractors do a very good job, and sophisticated clients are very clear on what they want to main contractor to do for that 20% margin. Where you have that sophistication, it works quite well. B4Box is a good model for how SMEs can operate, and like I say, I think conditionality can be a bit of a distraction. I think we need much better and more sophisticated clienting.

So the good practice is B4Box—and it is direct contracting, rather than losing 20% of margin via an intermediary?

Yes.

That is very interesting. Thank you.

Can I also highlight something that would help me, as an SME, to employ more apprentices? It is about the fact that, whenever I take on an apprentice, part of the conditions that I sign with the college are that I cannot put any conditionality—a different sort of conditionality—on the apprentices to pay back any of their training costs should they leave after a year, two years or three years. That would actually be against the terms of my contract with the college offering the apprenticeship. I think that model worked a long time ago, when people stayed with apprenticeships for a long time and it was part of a network—a familial network or whatever—but now it is a big risk as an employer to take someone on and train them for two, three or maybe four years, just to have them leave. I know that it is really common in a lot of the more professional jobs, like law or accountancy, to say, “If you leave within a specified amount of time, you will be liable for a portion of the costs it has taken to train you up,” but as far as I understand it, that is not allowed here.

Thank you.

This section is a little bit about required skills levels and widening participation. The Committee has already sort of established in a previous session that, ultimately, raising standards is not really the issue around recruitment. Would you agree? There are other reasons why recruitment in the sector can be tricky, and we can come on to that, but we want to tease out a little bit more about how it is not raising standards bit that is really the problem; it is other things. First of all, would you agree with that? We are trying to understand the balance. Would that raising of standards have a knock-on effect on recruitment, or is that not really the problem?

My view is that there are a lot of people being recruited into construction and we need a lot more to be recruited, which is where the workforce strategy and the Office for Clean Energy Jobs have a very clear role, but actually the issue is more about retention. We have spoken about the things that impact on retention already. In many cases, it is more important to have that discussion with employers, because there is a handover point from a college environment to an employer environment, and it works well when that handover point is clear, when employers are engaged in shaping it, and when there is a clear relationship that means that the portfolio completion can take place. By standards, I assume you mean the extent—the depth—to which people are trained?

Yes, for the green construction future.

With a national workforce strategy, there is a key regional component, because the regions differ a lot in what resources they have, what the challenges are, where construction projects are located, what construction projects are dominating and so on, so I am slightly wary of using a national strategy. There are key things that a national strategy can pick up, but it needs to be a framework that is quite regionally based, because then at a regional level you can determine the standards with employers that work best for the situation in that region. For example, in the north-east, there is a relatively high percentage of wards with indices of multiple deprivation; there is a big problem in terms of the number of NEETs; there are families who have had worklessness for generation after generation. The response to that is going to be very different from a regional strategy in London and the south-east, for example.

I absolutely agree. In Surrey, we see a very different problem, which is that we want to attract the high-quality applicants into the sector, so having higher standards and a well-recognised qualification that gets people into the industry helps those people to feel like they are getting really good jobs. It is exactly the opposite problem.

For under-represented groups, or the long-term unemployed, is there anything you would seek in order to widen participation? What is it that stops participation in those jobs? Is it about childcare, for example, or long-term unemployment? What could widen participation?

It is more about opportunity, rather than there being a particular barrier. Career pathways are quite a good way to visualise how your career in construction might flow, what the start point might be, where various routes might take you and what the pay and progression milestones look like and so on. If your starting point is that your attainment in school was not that great and you have a history of unemployment, construction is really good, because it is hands-on. It is a very people-focused profession, and it takes place all over the country. In retrofit alone, there is a 30-year pipeline of work, so there is enough to make a career out of. It is about two things. The first is the ability to visualise what that progression might look like, so that if you are in that position where you think, “Right, I am fed up of mucking around and I want to make a go of this”—I have worked with kids who are in that position—you can see a starting point. That is quite intense and needs quite a lot of support. Secondly, it is about the regional component shaping that programme so that it responds to the reality on the ground, in that region.

The ability to get the apprenticeship—to have the employer to work for—is a big barrier. I come across lots of people who are trying to get into the industry via this college course or that college course, whether that is through a private or a Government training provider. Some people are even hoodwinked into going on what look like excellent training courses to get them into the industry, but if they have not managed to secure work experience—that person to let them drive around in the van with them for the day—it is really hard to actually get into the sector. The way those jobs flow—the way those experiences are doled out in the SME sector—is largely between family and friends. I make a point, whenever I meet people who have come into the sector, of asking, “How did you get your first opportunity?”, and it is a cousin, a brother or an uncle. If you have a group of people that those jobs are flowing between, and you want to widen the pool, there has to be a way of enabling people from different cultural or gender backgrounds to get access to that opportunity to travel around in the van for the day.

Do you think there is any role for jobcentres to support what we have discussed today? What about more support for jobcentres, or more guidance for them on how they can help applicants?

Leah is right. My experience is also that the route into construction for a completely new entrant is generally through friends, family or word of mouth. You have an uncle who works on a building site, and you find out they have an on-site construction hub on the building site—it is that sort of connection. I do not know jobcentres well enough to understand how they might fit into that, but I can certainly imagine that they would have a role in articulating career pathways, because in construction you can have a relatively inexperienced entry point. That might be something that jobcentres can connect with.

They also help with applications. If you go to a jobcentre, they support an application and that sort of thing. I know that the Chair wants to move on, but do you have any ideas about how to support that?

Can I give some follow-up information, or are we short of time?

No, you carry on.

To some extent, where that would work is in the more formal entry points. There are plenty of programmes out there. I recently spoke to one social landlord who works with a main contractor in their retrofit programme. I spoke earlier about main contractors taking quite a large slice—in this case about a 20% slice—but there is a very clear understanding from the social landlord of what outcomes they get for that slice. That includes good-quality employment and training outcomes. I can see a jobcentre helping with that more formal route, which gets people trained. The main constructors have their own academy and they put people through that. At the end of the academy process, which includes their on-site experience, they get a job with a main contractor or with a social landlord. One of the problems with that—I mentioned this earlier with some of the Government programmes—is that it was quite dependent on the warm home funding and the funding for social housing retrofit. That allocation being cut to 40% of the bid completely disrupted all the planning around that programme and how it was due to operate with that pipeline and flow. There are bigger issues in construction, programme design and clienting that a national workforce strategy will sit within, especially if we are looking at formal routes into employment, which are dependent on predictability, pipeline and longevity.

Welcome, Tom and Leah. I have a couple of questions for you both. To what extent do you think that existing market signals and incentives will drive demand versus, say, a local authority-led programme to catalyse retrofit? If there were a large programme in the local authority sector, to what extent do you think that would draw demand away from the owner-occupied sector and present a shortage in that segment of the market? [Interruption.]

We will give you some time to think about your answers, while we suspend the sitting to go and vote. Sitting suspended for a Division in the House. On resuming—

Welcome back. Bradley Thomas, would you repeat your question?

My question to you both: to what extent do you think that the natural activity in the market and the incentives there will drive demand for those seeking to upscale and transition, versus, say, opportunities that arise from being catalysed by a public sector or local authority approach? Would a large-scale public sector or local authority retrofit programme be to the detriment of the owner-occupied sector, which would see a shortage in the demand for skills as a result?

To take the second part of your question first, absolutely. Part of the problem with a cyclical marketplace is that a response to it is to push up prices, rather than necessarily to recruit and grow. The other risk that that creates for owner-occupiers is the more professional members of the marketplace withdrawing on to big contracts, which leaves the space wide open for some of the people who should not be touching domestic property. Most private householders will judge a contract by the cost of it, which is understandable, because they are not construction professionals. As one of your witnesses was saying, there is no barrier to entry to become a builder—I could call myself a builder tomorrow—so that creates quite a lot of risk as well. One of the problems is that we tend to view skills as something we get if we put in the financial input. One of the things that I talk to clients about is the triangular relationship: clients are the ones investing the money in the supply chain, and skills will work most effectively when the supply chain is engaging with the educational sector—the FE sector—to demand particular skills. The only way that they will do that is if clients reward the outcomes from that skills training. There is a big gap at the moment in how that flows. We get quite a lot of input funding for skills, hoping that that will match some of the demand that might come from the supply chain—we have talked about the nature of the supply chain—when actually the supply chain is responding to what clients are asking it to do. If clients do not have a consistent pipeline of work, do not have a consistent ambition, are not very good at articulating what they want the supply chain to do, and are operating in a short-term, transactional, cost and compliance-driven way, then those things are not going to match together. You are going to get a situation in which a large-scale investment will have effects elsewhere that are unhelpful overall. I have spoken already about how we need to think much more in terms of outcomes. What outcomes do you want from skills and training? You are not investing in it because you want people to sit at a desk at college; you are doing it because you want to improve life chances. We need much more outcome thinking, and we need better construction clienting. That is not completely within the Government’s remit, but the Government are a very significant construction client. The warm homes fund is a massive investment in the retrofit marketplace, but the programme structure and the term are quite poorly designed. There is much more that it could do so that it translates into sustained skills, rather than short-term responses to chunks of money.

It is about consistency and trying to move the construction sector away from this cyclical boom-and-bust problem. At the moment, the Government are not helping with that, and they definitely could. As a business, I could happily do with some bread-and-butter work that I knew would be a regular pipeline of work going forward. That would enable me to decide what people I need to take on. With homeowners, all sorts of different things happen, such as a downturn in the economy, or, as we heard today, the promise of new subsidies, which may well actually have a negative impact on my business, because people sometimes hold off and wait to see what the next thing is. That homeowner work is not reliable for me as a business. If I had, undergirding it, a steady stream of work from a local authority that prioritised the fact that I am training apprentices, that would be fantastic. It is about finding a way to make those things work together, so that as homeowner demand grows, which it does a little patchily, there is an ongoing consistency from Government schemes. That could be really helpful.

The attitude of most SMEs I have spoken to is very much, “I do not want a guaranteed contract, but I want a shot at a contract, and I need to know what I want to do to get that contract.” If what you need to do is skill your people up, that is what you will do. The other thing they are desperate for—this is a point made consistently by Construction Alliance Northeast—is a chance to use their skills and experience. At the moment, the way we procure supply chains means that they have very little chance to do that. They either work through main contractors, or the exam question is, “How can you do this as cheaply as possible, with a bit of social value put in?” That is a bit sweeping, but the marketplace is not really challenging them. Ultimately, the challenge on decarbonisation and jobs is largely around spending the money we already spend much better. We need a much clearer focus on productivity and innovation. We need to create an ecosystem in which SMEs are rewarded for their contribution. They have no problem doing the things we are asking them to do and participating in the way we are asking them to participate; it is just that they work in an ecosystem that has a lot of barriers to that actually happening in practice.

In your experience, how responsive are individual workers and smaller employers to changes in Government skills funding? You have already touched on some of the Government programmes. When the Government have a very big stake in something, it is obviously the Government’s responsibility, but what about the private employers?

My frustration is that the emphasis on skills funding is always about college courses or sitting in a classroom. If I want to train people up, I really want to take them on and primarily have them on the job, being mentored by my experienced engineers and learning how to do the job. The offers that I see from Government funding are three or four-day courses to teach you to be a heat pump engineer, or they are skills bootcamps where people go for five or six weeks to increase their skill level. That does not do what I need it to do as an employer. I need some support to be able to mould people on site. I think we have to get away from this idea of sitting in a classroom looking at PowerPoint slides. I have done a lot of industry training, and that has always been my experience—you sit in a classroom and look at PowerPoint slides. That is not a good way to train people to have good retrofit and heat pump—whatever renewables—installation skills.

If you are looking at the skills gaps, I think you mentioned earlier that it takes time, from the beginning, to get people through the whole of a career. What could the Government do in the short term to address the skills gaps? What type of funding, policies and frameworks would you, if you were the Government, put in place?

There is one scheme—it is still a very small scheme—I have seen that I think is fantastic. Nesta is running a scheme making available a heat pump to a heat pump installer who has been on the four or five-day training, because to just do the training and then have to try out your first heat pump install in a customer’s house is difficult to arrange and quite nerve-racking. Instead, it is funding installers to have a heat pump that they will install in their own home, so that they can at least get their first install under their belt. It is not just about doing the short course; it can be something as simple as enabling you to do that first installation, so you are moving from being a gas engineer to having actually hands-on fitted a heat pump from start to finish. I think that would have a real impact.

Just to confirm, are those first installs always supervised?

These are people who have done the training, and they are then fitting in their own home.

Yes, but you were talking about where the first install is in the customer’s home. Is that supervised?

Typically, if it is in a customer’s home, then typically it would not be. You could do the four-day course, and you are then a trained heat pump installer and nobody needs to supervise your work at that point.

Are there examples of incorrect installation?

We see terrible installations far too frequently, I am afraid.

Do you attribute that to the lack of quality training?

Yes.

Do you think that having a heat pump that you can mess around with in some sort of small employer’s place, where people can try it out and see what works and does not work, would really make a difference? Is that what you are saying?

I am talking more about the opportunity to actually install one in a home. Rather than it be in a college or training centre, these heat pumps are being given to people to go and install in their homes. Does that answer your question?

I am trying to understand how I should think about it. They are given the heat pumps and are told, “Install it in your house”?

In their own home.

Okay, in their own home—sorry. Understood.

There is another example you might be interested in, with that hands-on practice in mind. I think it was from 2016 or so, with the Fabric First Institute in Norwich. Norwich city council was developing its new build programme based around the Passivhaus standard. To build Passivhaus properly, you need to be quite highly trained, because you need to get the integration of all the interfaces and components right.

Would you mind just explaining Passivhaus?

Passivhaus is a standard for new homes that is a very low-energy standard. The Fabric First Institute was an example of where the supply chain came together to provide materials, a house was built within the warehouse, and trainees were supervised but largely let loose on the house. The point of it was that they could do stuff to this construction and use thermal cameras and thermal imaging, make mistakes and get things wrong, and then see the impact of that. They could understand, “Oh, that’s why you don’t drill through an airtightness membrane.” There are lots of quite good examples of practice out there.

But should they not then also write a write-up of what went wrong—a script for people to avoid the mistakes they have made? Should that not be part of it?

That sort of guidance is quite widely available, but there is nothing quite like getting your hands on something and being able to play with it. That is a bit of a tangent from your original question. I cannot think of much in the very short term that can be done because, to some extent, a lot of the employers that are interested in that and the colleges that are quite proactive in this space are doing things to try to mitigate some of the structural problems we are having. In the longer term, we are talking about sustainable supply chain growth, and that is much more of a cultural challenge. That is not to say it cannot be done, but it is quite a challenge in terms of how we understand funding, how we articulate outcomes and what sort of term we let the funding over. Also, Governments over the long term have tended to get quite involved in the detail, when in many cases they really should be stepping away from that and being much more focused on, “This is what we want the investment to do, and you can access the investment if you can show us how you are going to get to that point.” That is a slightly longer-term challenge, but it is one of the ways to more sustainable supply chain growth.

Thank you very much for your evidence. That is the end of our session. Order.